The RotoViz Guide to Value Based Auctions – Part I

Auction drafts for fantasy football leagues may not be the standard format, but I think they’re a killer enhancement to the hobby. For the true fantasy football addict, you just can’t beat the idea of going into your auction and being able to create just about any team you can dream up. If you are the kind of player who just wants your guy? You got get ‘em! No worrying about whether he falls or not. No worrying about having to reach. Just get him. Or perhaps you’re the ultimate value investor. You love to sit and wait, lurking in the shadows until everyone else has spent too much money and the board is just littered with undervalued studs. You get to dominate the middle portion of the auction as your leaguemates just watch in horror while you stockpile talent. The possibilities are endless.

The flip side of the coin is that precisely because auctions have that ebb and flow that snake drafts do not, they can be very tricky. Where should you spend your money? Do you go with the stud QB? Should you stockpile running backs and wide receivers? What’s the best way to gain an edge over your leaguemates? They seem like difficult questions, but I have some answers for you.

If you’re doing the prep work yourself, you may have tried taking some pre-season projections and some average auction values from any of the sites out there and created a Points-per-Dollar calculation. This is a logical way to look at things, since you’re trying to maximize the points on your roster, given your budget. Here’s what the top players from each position look like on the points-per-dollar (PPD) metric. (To keep things standardized I’m using the projections and 10 team auction value data from FantasyPros.com that feed the Salary Cap App, and I’ve set the scoring to 0 PPR for a “standard” league.)

The initial (and natural) reaction might be “I should be sure to get Aaron Rodgers because he’s the best use of my dollars.” I’m going to show you not only why that logic is flawed but also why Aaron Rodgers is actually the worst use of your auction dollars out of these four players.

You may know where I’m going with this, so rather than reinvent the wheel on exactly why the Late Round QB strategy works so well in fantasy football, I’ll point your attention to what I consider the definitive resource on the topic: “The Late Round Quarterback: 2013 Edition” by JJ Zachariason. In that book, Zachariason decomposes the success of the Late Round QB strategy into chapters about relative positional value, player projections, supply and demand, and the impact of weekly scoring. There are several formulas and tables in the book that are elegant in their simplicity yet do a fantastic job illustrating why the strategy works. There’s even a chapter dedicated to employing the strategy in an auction league. I encourage everyone to check out the book and the website to see for yourself why you should be using this strategy to dominate all of your fantasy leagues.

With that knowledge in your back pocket, I hope to expand on Zachariason’s work and show you the massive advantage you can gain over your leaguemates when you employ the equivalent of the Late Round QB strategy in auction leagues. I like to think of it like this: What you’re actually doing by “waiting” for one of the cheaper QBs in an auction (i.e. spending less of your budget than the rest of your league) is employing “Late Round QB on Steroids.”

If you stop and think about it, a snake draft and an auction aren’t really all that different except for the order in which players get picked. In both cases you have a certain amount of capital (draft picks or dollars) to spend to create your team. In a snake draft, you burn your high picks on the players you think will score more points than all the remaining players at their position. The same should hold true for auction – you burn the bigger chunk of your dollars on the players you think will score more points than all the remaining players at their position. Equally as important as the player you DO pick is the player you DON’T pick, also known as “opportunity cost”. Each pick you make in a snake draft carries the opportunity cost of NOT drafting every other player who goes after him since most of those guys will end up on your competitors’ teams. Likewise with an auction, every player you spend money on also carries the opportunity cost of NOT being able to spend that money on all other players. Which, again drives home the point – you invest the biggest chunks of your capital (draft picks or auction dollars) on the players you think will score the biggest margin of points over all of the other available players at their position.

So, let’s tie this opportunity cost concept back to the original example where we looked at the Points-per-Dollar analysis of the top players. What we need to look at here is not just the points-per-dollar of the players we’re buying but also the points-per-dollar of all of the other players we could be buying with that money. So what we really need to look at is relative production and relative cost as opposed to absolutes.

Using the same data from FantasyPros.com we can look at the projected points for each position. If we let the top scoring player at each position be 1, we can measure each successive player as a percent of the top player. We’ll call it Relative Points. For example, Calvin Johnson is projected to be the #1 WR in 2013 with 225 points. His Relative Points is 1 (225/225 = 1). A.J. Green is projected to be the WR2 with 202 points. His Relative Points is .90 (202/225 = .90).

We can look at the average auction values from Fantasy Pros and do the same relative calculation. Calvin Johnson gets the top dollar value of $49 and we’ll let that be a Relative Price of 1. ($49/$49 = 1). Then we can then measure every other WR’s price relative to Calvin. A.J. Green has the 2nd highest price of $44 for a Calvin-Relative Price of .90 ($44/$49 = 0.90). We iterate this across the rest of the WRs and then across the rest of all of the other fantasy positions.

Note: Because rankings (and auction values) can sometimes differ a bit from projections – due to the concepts of upside, downside, and consistency – I took liberty of reassigning the auction values in descending order to match the projections. For example, Andre Johnson has a point projection of 176 which puts him at WR8, but he’s the WR7 in terms of average auction value. I’ve assigned him the WR8 price to represent the dollar values that go with the positions. The adjustments are small (only a dollar or two here and there) but I wanted to give full disclosure in case you noticed that any of the numbers don’t match up exactly with what’s in the Salary Cap App.

Expanding on this notion of relativity, if we divide each player’s Relative Points by their Relative Price we get what I like to think of as Leverage – a term borrowed from investing. In the portfolio management sense (which is essentially what creating a fantasy football team is) Leverage involves borrowing money to gain extra market exposure, thus amplifying gains or losses. The same concept applies here. For our purposes Leverage tells you how far you’re stretching your precious auction dollars by selecting each player. You’re financing the purchase of more expensive players (RB and WR) by “borrowing” from players with greater Leverage (QB and TE). The more points you can “finance” really cheaply (via say QB12), the more you can invest in high cost players. So, a higher Leverage number is better. Remember, we’re really trying to find out what the opportunity cost is of selecting each player. So on a position-by-position how much Leverage are we gaining by taking the cheaper player?

What this is telling us is that for Julio Jones you’re expecting to get 86% percent of Megatron’s production while paying 73% of Megatron’s price. Or, put another way, Julio’s 5.35 points per dollar is 1.17x Megatron’s 4.59 points per dollar. That 1.17x factor is Julio’s Leverage. The dollars you spend on Julio give you 1.17x the points as the dollars you spend on Megatron. You get the point…

What you start to notice is how the Leverage increases pretty rapidly with TE relative to the other three positions. You stretch your dollars much further by “financing” those Vernon Davis points cheaply (3.41 Leverage) than you do trying to save some dough by passing on AP for Marshawn Lynch (whose Leverage is basically just 1). QB exhibits a Leverage increase also, but not quite as rapid as TE. More on that in minute.

So, now you start to see: The reason I like to think of “Late Round QB on Steroids” in auction leagues is because of what you can do with the extra money you save by selecting the cheaper player. In a snake draft if you pass on Aaron Rodgers you get to draft a second (or third) round RB/WR. If you pass on Peyton Manning, you get to draft a 4th round RB/WR, and so on. You get the value of a player in that round and no more because snake draft picks decline in value in a linear fashion. Auction leagues are different. The way the price curves fall off toward the “later” picks means your waiting rewards you even more than it does in a snake draft. To put in into snake draft terms: if you Pass on Aaron Rodgers and draft Tony Romo in an auction league, you get the equivalent of an extra 3rd round pick for free! You can either spend that 3rd round pick on a 3rd round player or you can use it to bump your 2nd to a 1st, or bump a 4th to a 3rd and a 5th to a 4th, and so on. It’s the logarithmic shape of the price curves in auction leagues is the steroids that juices the Late Round QB strategy. Let me demonstrate.

Here are the Relative Points and Relative Price curves plotted against each other for each of the four positions. The area between the curves represents the points-per-dollar value you gain by waiting for the lower-priced player:

Quarterback (Aaron Rodgers would be QB1)

Running Back (Adrian Peterson = RB1)

Wide Receiver (Megatron = WR1)

Tight End (Jimmy Graham = TE1)

You start to get the sense of how that area between the relative points and relative price curves increases more rapidly for QB and TE relative to RB and WR, but it’s a little difficult to tell exactly how different they are. Now here’s the fun part – I’m going to share with you what I like to call the “Rosetta Stone” of auction drafting. Bringing it all together, we can plot the Leverage for each position (which represents that difference between points and dollars) on the Y axis and let the X axis be each player starting with the #1 scorer and going out to the #60 scorer (QBs and TEs are truncated at 30). Here’s what we see:

Immediately, you can see how far you stretch your dollars when you “wait” on QB and select one of the cheaper options. Yes, you are sacrificing some projected points by moving down from QB1 to QB12, but on a relative basis you’re more than being made up for the drop in production by the drop in price. The dollars you spend on Tony Romo are 2.89 times as powerful as the dollars you would have spent on Aaron Rodgers because you’re getting 79% of ARod’s production for only 27% of ARod’s price.

Meanwhile, the RB and WR markets are much more efficient. The price break you’re getting by taking the 12th RB is very much in line with the drop you’re going to see in production. If you buy Steven Jackson you pay 56% of AP’s price, but you’re only getting 72% of AP’s production. Steven Jackson’s Leverage is only 1.30. You have to spend the dollars in the RB and WR market to get the points. So what you do is, take advantage of the inefficiency of the QB market in order to pay closer to fair value in the WR and RB market. What this means is you probably have a slight disadvantage to your leaguemates with respect to QB (where there is only one weekly starter per team) but you have a bigger advantage at WR and/or RB where you start up to three players per week (assuming flex). And with all of the great writers at RotoViz helping you identify not one, not two, but three stealth stars at QB, you may not even have a disadvantage at the QB position at all!

Note: Obviously the same can be said about waiting on TE (and to an even greater extent than QB). The reason that I focus on QB so much is because they tend to go for much more money than TEs do in general, so what you save on QB on an absolute basis can help you much more than what you would save on TE.

Lest the inefficiency we’re seeing be simply a function of the 10 team league, I ran the numbers with FantasyPros.com 12 team data and the chart looks almost identical:

Is it possible the inefficiency is just a 2013 phenomenon? I say not a chance. I don’t have any formal numbers on this, but from my own personal experience participating in auction leagues for the past 4 years, the the shape of the price curve for each position stays pretty constant. If you look at either average auction value data or expert consensus values they all tend to stay roughly the same for each position too. It’s not as if one year you find top QBs going for no more than 10% and another year they’re going for 25%. There are slight variations, but the curves and relative prices for the positions remain fairly constant.

To me, the inefficiency is exactly the same one that persists in snake drafts where QBs still tend to go too early on the perception of “safety” or the simple “they score the most points” argument. There’s surely a supply/demand effect going on as well. Despite the fact that the 25th quarterback is projected to score almost as much as the 15th, the oversupply drives prices down rapidly. No one wants to pay up for their backup QB. But as long as those price curves stay constant, you can continue to use it to your advantage.

Another great part about this strategy is that all of this assumes perfect forecasting, which we know is far from the truth. The projections we have in the Salary Cap App are the best out there. But consensus opinion (as proxied by ADP) will still drive the price curves. And we KNOW that a large component of ADP is based upon the previous season’s production, even though that has little predictive value for the upcoming season. So, with the help of Similarity Scores and all of the research and actionable information here at RotoViz you’ll be able to improve your odds of landing cheaper players who will outperform their ADP and avoiding expensive players who will underperform. In short, you will absolutely DOMINATE your league.

In the next installment in the series I’ll use the Salary Cap App to take a look at the impact that the price of your QB can have on the look of your team.

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Last year was the first year of keeper auction league (12 teams). I'm looking to keep Adrian Peterson and Jamaal Charles for sure (45 each). I have Peyton and could keep him for 23 dollars. That's pretty good for him but would it be worth it to drop him and pick up a Tony Romo and commit those dollars somewhere else? I'm very tempted to try and get a top 12ish RB to fill my flex and just fill the bench with scrubby high upside guys. What do you think?

I'm in a 12 team league that starts two QBs weekly. What I'm trying to figure out as best as I can (which is hard because I haven't found an auction mock that has 2 qbs) is how much prices will rise for QBs that usually would not cost very much. And with the rise in price of QB, I'll have to sacrifice some savings that I would like to spend on other positions. If I were to say I was aiming on Stafford and Dalton, how much do you think I'd have to spend on them? And what tier guys should I aim for in the other positions? Julio and Sjax are pretty much the top guys I want to reach for, not going after any studs.

If you're in a league with a TE/RB/WR flex spot, does the opinion change on Jimmy Graham? At that flex spot, could he provide the appropriate leverage vs. Calvin and AP, and act as an insurance policy to your actual TE position? Or even just act as a placeholder in the flex position and in the event you hit a lottery ticket like Bernard Pierce or someone, he can open up a starting spot for him by moving to TE?

I'm in a keeper league with only 5 bench spots (I lobby every year to add more, to no avail) which makes me wary of going cheap on QB since I'm would almost certainly need to have a committee of 2 or more QB's to make it work. I feel like the bench spot to use on a flier RB/WR is almost worth more than the $10-20 I could save on going with Flacco/Dalton type instead of Kaep/Luck/Wilson (wouldn't feel the need for a backup).

Also, based on my projected roster it would come down to Kaep type and RB4 (for me) like Pead or a Flacco type and a RB like Vereen. In a ideal world I would only start Vereen/Pead during bye weeks or injury to my top 3 RB's. Kaep would start every week except bye/injury which seems way more valuable than the upgrade from Pead to Vereen. Please convince me I'm wrong on this thinking.

This is interesting... the general approach to this kind of analysis is value over replacement (which can be customized based to one's roster priorities simply by moving the fulcrum of "replacement"). I'm intrigued by your approach, and interested to see how you use this to maximize a roster.

The salary cap app, btw, can't be used for a 12 team league. But you probably know that.

The fantasypros data is seriously flawed as it's based largely on 3 sets of auction values from the CBS analysts (plus a fourth from good ol' Walter Football, who really shouldn't be on anyone's list of fantasy experts). For one thing, the CBS guys base their $ figures on a $100 budget, which doesn't translate directly to a $200 budget by simply doubling the numbers. For another, none of these auction values add to the correct total! The CBS guys should have 192 players total $1200. Instead Jamey Eisenberg has 193 players for $1368, Dave Richard has 160 players for $1288, and Nathan Zegura has 215 players for $1328.

Any set of auction values MUST represent the league to which they portend to apply. The less they actually do so, the less helpfult hey are in pricing the league's players. ESPN's numbers, to their credit, add up to 160 players and $2000 (currently, they make up half of the FantasyPros 10 team prices -- the other half is NFL.com, which values 200 players at $2715, including Andre Johnson at $0). If the players in your league rely on overpriced suggested values, then the players in the middle of the draft will start to go cheap. You can see this in action if you look at the NFL.com suggested auction values next to their average auction values:

Eric Decker for $3? Darren Sproles and Tony Romo for $4? Their suggested prices are 16, 17 and 19, respectively.

So, obviously, these guys aren't getting paid for giving auction advice. I prefer auctions, but that probably puts me with 2 or 3% of fantasy football players out there (though I imagine we're a bit larger share of rotoviz readers), and I accept my place in the world. But my point remains: these prices should be taken with a grain of salt.

Your point regarding QB pricing still holds up on an academic level: at some rank in the late teens to early twenties, a QB drops to $1. That player's relative points is going to be somewhere around 0.6, and his relative price is 1/44. For TE, relative points are going to be 0.5-0.55 and relative price is 1/34. So the name of the game is getting your hands on the best $1 QB you can have. My strategy is to start nominating backup qb's early: no one wants to pay an extra dollar for Flacco or Roethlisberger while Peyton Manning is still on the board, and the only way to get a $1 QB is by nominating him yourself.

This is one of my favorite articles so far and I think really highlights what Rotoviz is all about - the value play.

One of the strategies that I like to employ is nominating QBs as early as I can - guys like Brees, Rodgers, Brady, Manning - so I can just watch everybody at the table get into a bidding war in which I have no interest in participating.

I just found that one with google in a few minutes, so there's probably a better one out there. With a 2QB league, the big difference is that your replacement level QB has essentially shifted all the way down from around QB 24 to QB 36. Your top 10 QBs are easily on par with your top 10 RBs. Human sacrifice, dogs and cats living together... mass hysteria!

If you don't have the inclination to do the math, another easy way to set up dollar values would be to take a 2QB league overall ranking or mock draft that you like and transpose it over a dollar value set from a regular league (transfer the the dollar value from the top ranked player onto your top ranked player, the second ranked player onto your second ranked player, and so on). It's quick and dirty, but it will probably get you in the neighborhood.

@DonValentino91 That's a tough situation. I haven't done any digging on the internet for 2QB auction data, but I'm sure you're right - it's probably next to nonexistent. I would guess in a 2QB league the entire QB price curve shifts up, but more importantly the back end of the curve probably comes up further (in a relative sense) making the curve a lot flatter. That would take some of the benefit (leverage) out of waiting on QB, but it wouldn't take out all of it. I was saying to someone else on Twitter who had a similar question, that I feel like it probably moves the sweet spot from QB12 - 18 up to QB8 - 14. Unfortunately, it's really hard to say what you'd actually pay, but the good news for you is that by waiting you'll start to get a better sense of what you'll probably have to pay since the price discovery for the first 6 or 7 QBs will have already happened. So, I would start off budgeting conservatively (meaning over-budget) for Stafford/Dalton and focus on trying to get Julio and SJax early on for close to fair value (or better if you can). But as the auction unfolds, constantly re-adjust your RB and WR budget as the first six QBs come off the board and (hopefully) it looks like you'll have plenty in the bank to land both guys. Any money you save on your target players early, just recycle back into the WR and RB budgets.

@dillon123 This (and any VORP analysis) ultimately comes down to how accurate the projections are. If your projection is more on the conservative side (170 non-PPR above), then you're better off passing on Graham and using the money to upgrade an RB or WR. You don't sacrifice as much production per dollar by moving down the TE spectrum as you gain by moving up at RB or WR. However, if you believe Graham will outperform all other TEs to the level he did in 2011 (by scoring on par with a WR1), then he would be in the mix for consideration, especially if his projected price holds true.

Anecdotally, I find the more rare the player is perceived to be, the more likely he is to go for even more than his projected auction price. So, if you do believe Graham will perform like a WR1, you can target him but I'd suggest tweaking your expected price by between $5 - $10 (assuming $200 budget) to see if he still looks attractive on a relative basis. If so, go for it. If not, hold true to the leverage chart and pick a cheaper TE while investing in RB/WR. Hope that helps...

@erock103 My analysis here really comes from a redraft perspective. Adding in the keeper element from your league changes the equation a bit with the addition of a multi-year time horizon on player projections. The values at which you'd need to keep your players would be a big factor as well (assuming that's how your league handles keeper with auction).

Your specific situation is difficult because personally I like Vereen a lot more than Pead, but I also like Kaepernick a lot more than Flacco (for this year anyway). Again, it would probably come down to the values at which you get to keep them, but I'd lean slightly toward keeping Vereen and streaming QBs (especially if it's a PPR). I still believe you can "manufacture" a startable QB much more easily than you can a startable RB.

@dontyouhatepants Thanks for the feedback. Even though my sense is 12 team leagues are much more prevalent, I chose to run everything on 10 team data to synch up with the App. I threw that 12 Team leverage chart in there as well (which uses the imperfect CBS data you mentioned) as a control. I've also run the same analysis with the data from my main redraft auction league from the past three seasons. It's a promotion/demotion setup with two 12 team leagues so I have six iterations and the leverage charts look very similar there too. So while the data is somewhat inconsistent, I do think the analysis holds up on an academic level (as you put it).

Looking forward to your comments on the application of the strategy in Parts II and III.

Thanks Ryan for the feedback. I'm looking forward to the rest of the series.

Another question arises for leagues with a flex position...I know the rule of thumb is starting a RB in that position but based on the "leverage" would it make more sense to look for WR's to fill the flex position?

@erock103 If you look at the chart, the green WR line hovers just above the RB line for about the first 20 spots or so so technically the WR dollars in that range take you a little farther. But, for all intents and purposes, those lines are identical. So I'd just target the WR or RB who you think has the most potential. Generally, WRs tend to give you a little better points-per-dollar in that 10 - 20 range than RBs, but I would also say they're less consistent on a weekly basis, which is probably why you get that "discount" relative to RBs. Hope that helps.